Richard C. Longworth, senior fellow at The Chicago Council on Global Affairs, contributes his knowledge and ideas about issues that affect the Midwest.

Friday, September 28, 2012

Cheaping Out the Future

We've written before about the declining support by Midwestern states for the state colleges and universities -- especially the big research universities -- that bear their name. A new report has just documented just how sharp this decline has become, why it's a national problem and what it means for our ability to support ourselves in the future.

Basically, the report says that most states -- including all Midwestern states -- are cheaping out the universities and research that will be their key to competing in a global economy.

In the eight years between 2002-10, no fewer than 36 of the 50 states cut their funding for their public research universities, as a percentage of those schools' total revenue. In some states, state funding actually fell: in the rest, it failed to keep pace with inflation or rising enrollments.

It gets worse, when the spending per student is figured. In 44 of the 50 states, state support fell on a per-student basis. The average decline was 20 percent for all the states, To stay in business, the schools have had to rely on bigger gifts by alumni, contracts with corporations or especially, as parents know, higher tuition.

The worst states were Colorado and Rhode Island, which cut per-student spending by nearly half -- 48 and 47 percent, respectively. But two Midwestern states ranked in the bottom ten -- Illinois, with a 37 percent cut, and Michigan, where per-student spending was down 31 percent.

Five other Midwestern states reported double-digit declines in state support -- Iowa and Minnesota both down 24 percent, Ohio down 19 percent, Indiana down 18 percent and Missouri down 14 percent. Wisconsin's support was down 9 percent.

If the boundaries of the Midwest are expanded to include the Great Plains states, one-state, oil-rich North Dakota, raised per student support by 4 percent. Otherwise, all figures were down -- in Kansas by 23 percent, in South Dakota by 20 percent, and in Nebraska by 10 percent.

In other words, as states struggle to balance their budgets, they're finding savings in the wrong place, paying for the present by starving the future. The National Science Boards put it this way:

"Declines in state funding threaten the ability of major public research universities to educate new scientists and engineers, recruit and retain the best faculty and students, and continue performing top-quality research." This is undercutting their ability to "conduct basic science and engineering research that leads to innovations, and perform their public service missions."

In the global economy, prosperity will belong to the states and regions with the best-educated residents, the cutting-edge ideas and the universities that draw the top scholars from around the world. By cutting support for their big research universities, Midwestern states are guaranteeing that they will become backwaters.

(Private research universities exist, of course, but can't take up the slack. For one thing, there aren't as many of them -- Chicago and Northwestern in Illinois, Washington U. in St. Louis, and that's about it for the Midwest. In addition, they usually have smaller enrollments. And all charge students a lot more, with tuitions and fees more than four times the costs for in-state students at public universities.)

It wasn't supposed to be this way. The Morrill Act of 1862, which set up the land-grant universities, was a kind of bargain between the states and the universities. The states would support the universities and the universities would not only educate the states' students but would stimulate their economy -- in farming and manufacturing in those days, in space-age science and engineering today.

As we've seen, the states are breaking this bargain. On average, the 50 states today pay 23 percent of the operating costs at their public research universities. In much of the Midwest, it's worse, in the teens in states like Wisconsin and Iowa, down to no more than 7 percent at the University of Michigan. (The U. of M. isn't a land-grant school -- Michigan State plays that role in Michigan -- but as a public research university, it may be that state's number one economic asset.)

There are several reasons for this declining state support. One is the recession, although per-student funding, now about $8,000, peaked at more than $10,000 (adjusted for inflation) in 2000, before the recession began.

Another is growing enrollments. With funding scarce and enrollment up, per-student funding is bound to fall.

But a big reason is political and economic. As globalization leaves more and more Midwesterners behind, voters can't see what university research is doing for them and oppose spending more tax dollars on increasingly remote university campuses. University officials themselves say that university education and research, which once was seen as a "public good" benefitting all society, now is perceived as a "private good," benefitting only the student.

But if legislatures refuse to pay for these universities, they still insist on controlling them. Public universities labor under political pressures unknown to private universities. Tensions are inevitable. Political meddling and legislative intransigence led to the recent resignation of Carolyn (Biddy) Martin, chancellor of the University of Wisconsin at Madison, and the firing (later reversed) of Teresa Sullivan, the president of the University of Virginia (where per-student funding is down 30 percent).

1 Comment

Interesting spin, but in looking at the source document, the current overall level of state support for state universities has just (during this recession) fallen back to the early 1990's level, measured in constant dollars.

Further: "The Federal Government has been the primary source of funding for academic R&D for over half a century. Federal funding for S&E R&D continued to increase at an average of 4.8 percent (constant 2005 dollars) from 2000 to 2009 when it provided 59 percent of academic spending on S&E R&D. However, it has been relatively flat over the 5-year period from 2004 to 2009, increasing by only 0.8 percent. The Federal Government also provides funding for S&E workforce development. In 2009, the Federal Government funded 63 percent of S&E graduate students on traineeships, 49 percent of those with research assistantships, and 23 percent with fellowships."

Finally: "Federal student aid has increased 164 percent since AY 2000-01 (inflation adjusted dollars). Total Federal aid from grants and loans for students attending all higher education institutions reached $169 billion in AY 2010-11, and undergraduate FTE students received an average of $12,455 in financial aid."

I'd conclude that neither universities nor students are starved for funds. State university allocations grew during good times, and shrank during hard times...because unlike the Feds, the states can't print money to pay current obligations. It would appear that the Feds have helped to mitigate state "shortfalls" through steady R&D funding and vastly increased student aid.

The Global Midwest Initiative of The Chicago Council on Global Affairs is a regional effort to promote interstate dialogue and to serve as a resource for those interested in the Midwest's ability to navigate today's global landscape.